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Project cost, as measured by the consolidated ERIL Index of Cost of Project Inputs, slipped for the second month in December. The picture may not change materially even when final estimates of WPI of project investment-related material inputs for the latest two months are released. Final estimates of WPI are available now up to October.

Project cost escalation on y-o-y basis during 2014 works out to 0.8 per cent, a half of an already subdued 1.6 per cent during 2013. WPI-based inflation for all commodities works out to near-zero per cent during the month, after over five years of positive growth. The combined WPI for manufactured products that sets the tone for project investment increased 1.6 per cent during 2014 (on a point-over-point basis).

Computed by Economic Research India Pvt. Ltd, ERIL Index measures project cost escalation in terms of WPI of material inputs relevant in project construction.

If we dissect the ERIL Index performance by around 235 project-related capital goods inputs, which go into the composite ERIL project cost index, we find that over the year WPI of around 69 merchandise declined, whereas those of 166 merchandise recorded positive growth (even though subdued in most cases). Among the merchandise with positive growth, bricks and tiles and marbles recorded around 10 per cent increase in WPI; PVC insulated cables 9 per cent; fibre optic cables 25 per cent; heat exchangers 10 per cent; pneumatic tools 15 per cent; loaders 17 per cent; and silencers and dampers 11 per cent, during 2014 (on a point-over-point basis). Billets (9 per cent), plates (6 per cent), and graphite amorphous and silver (11 per cent each) were among the merchandise showing decline over the year.

Production index of capital goods increased 4.9 per cent during April-November. Cement production increased 8.5 per cent and alloy and non-alloy steel 2.2 per cent during this period.

Trends for December
The total wholesale price index for non-metallic mineral products declined 1.7 per cent during the month due to lower price of white cement (4 per cent), grey cement and marbles (2 per cent each), and slag cement and lime (1 per cent each). However, the price of asbestos corrugated sheet moved up by 1 per cent.

The aggregate WPI for basic metals, alloys and metal products declined by 0.4 per cent due to lower price of steel castings (5 per cent), silver (4 per cent), pig iron (3 per cent), melting scrap, wire rods, angles, pencil ingots and billets (2 per cent each), and pipes, tubes, rods, strips, joists and beams, plates, sheets, GP/GC sheets, rebars and metal containers (1 per cent each). However, the price of slab increased 5 per cent, steel structures 3 per cent, zinc (2 per cent), and ferromanganese, iron and steel wire, fixtures and gold and gold ornaments 1 per cent each.

ERIL INDEX OF COST OF PROJECT INPUTS: DECEMBER 2014
Wholesale Price Index: 2004-05=100
Index
Y-o-Y Increase (%)
Increase Since March (%)
2014-13
2013-12
2014
2013
Non-metallic

mineral products

171.9
3.2
2.5
2.6
0.1
Structural clay products
193.2
7.0
8.4
4.8
7.7
Cement & lime
167.3
1.6
-0.1
2.0
-4.4
Basic metals, alloys &

metal products

164.8
-0.2
-0.2
-1.7
0.2
Ferrous metals
154.8
-0.1
0.0
-1.9
0.1
Non-ferrous metals
169.7
3.1
1.4
2.0
1.9
Machinery & machine tools
134.9
1.7
2.9
1.3
2.5
Industrial machinery
152.8
1.3
2.4
0.7
2.2
Construction machinery
141.4
3.3
0.4
2.8
0.1
Air-conditioners
& refrigerators
120.8
4.5
2.8
1.2
1.7
Non-electrical machinery
127.4
2.5
1.1
2.4
1.4
Electrical machinery
& batteries
138.5
0.5
3.1
0.1
2.8
Electrical accessories,
wires & cables
157.1
3.6
5.6
3.7
8.3
Transport equipment

& parts

135.9
0.0
3.6
0.1
2.8
Automotives
134.9
-0.5
4.0
-0.1
3.0
Auto parts
138.5
3.2
2.2
1.8
2.2
Composite ERIL Index
for project inputs
150.2
0.8
1.6
-0.1
1.6
Overall WPI
179.8
0.1
6.4
-0.3
5.6

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